My personal thoughts are similar to those of Mr. Frank @ qinbafrank, who skipped classes @ TJResearch01. "Flexibility" and "independence" are not synonymous Due to the existence of tariffs, the Federal Reserve has been on the neutral hawkish side in the past six months. Since the 21st century, although the 2% target has been emphasized, there have been many times when the target has not been achieved and interest rates have been cut. I believe the fundamental reason is that the Federal Reserve has found that it has lost its ability to manage long-term interest rates by maintaining its original pattern. Continuing to maintain a hawkish stance does not require emphasizing "flexible response". Only when changing one's stance will one silently pave the way and make some abnormal actions. As for why we need to change our stance? ① Since the development of fiscal expansion policies, the top priority given to this government by the times is to address the deficit. Whoever becomes the president or the chairman of the Federal Reserve can only delay this trend tactically rather than change it. The most important of these is to address statutory and interest expenses. To address interest expenses, interest rates must be lowered. However, reducing the 10Y interest rate since Q4 last year is currently not considered successful; ② From the perspective of global capital flow, the correlation between the direction of stocks, bonds, and foreign exchange has strengthened, and the US Treasury and US stocks have lost the "seesaw effect". The deficit problem has weakened the confidence of funds in investing in the United States, and it is necessary to change the original paradigm; ③ Since Q4 of last year, if the economy does not decline, trading will be re inflated, and if the economy declines, stocks, bonds, and foreign exchange will be killed. No matter what the Federal Reserve does, it cannot contain the upward trend of 10Y - in short, the Federal Reserve's ability to manage expectations has been weakened Conclusion: The Federal Reserve has found a decline in its ability to manage expected interest rates, and "flexibility" and "independence" are not synonymous. My personal understanding is that in the future, it will cooperate to some extent with Trump and the Treasury Department to reduce interest rates or expand its balance sheet in order to solve the deficit and 10Y problems. (However, what is important is the market's understanding. After last night's speech, interest rates slightly decreased, but in the long run, it is unknown whether the market will buy in, because relaxing the 2% inflation target also means that there is a high probability of more re inflation transactions.)